Gross Negative Fair Value - GNFV

AAA

DEFINITION of 'Gross Negative Fair Value - GNFV'

An assessment of the total fair value of a financial institution's (FI) contracts in which the FI currently has a balance outstanding to the counterparty. In order for the gross negative fair value to represent the maximum amount that would be lost by all counterparties if the FI becomes insolvent, it is assumed that contracts are not netted and that the other party does not have claims on the FI's assets.

INVESTOPEDIA EXPLAINS 'Gross Negative Fair Value - GNFV'

Along with gross positive fair value, this value can serve as an estimate to the FI's credit-derivative exposure. Carefully keeping track of these figures can contribute to controlling the FI's exposure to derivatives, because solvency issues can quickly emerge in situations where the market turns against the derivative positions held by the FI.

RELATED TERMS
  1. Fair Value

    1. The estimated value of all assets and liabilities of an acquired ...
  2. Derivative

    A security whose price is dependent upon or derived from one ...
  3. Default Risk

    The event in which companies or individuals will be unable to ...
  4. Insolvency

    When an individual or organization can no longer meet its financial ...
  5. Credit Derivative

    Privately held negotiable bilateral contracts that allow users ...
  6. Warren Buffett

    Known as "the Oracle of Omaha", Buffett is Chairman of Berkshire ...
RELATED FAQS
  1. What happens to the stock of a public company that goes bankrupt?

    Occasionally, publicly listed companies go bankrupt. The company's shareholders, depending on the type of stock they hold, ... Read Full Answer >>
Related Articles
  1. Investing Basics

    The Barnyard Basics Of Derivatives

    This tale of a fictional chicken farm is a great way to learn how derivatives work in the market.
  2. Mutual Funds & ETFs

    The Alphabet Soup Of Credit Derivative Indexes

    Find out how these instruments work and how they are used in the market.
  3. Options & Futures

    Haunting Wall Street: The Halloween Terminology Of Investing

    Beware of zombies and Jekyll and Hyde companies! Read about the spooky terms circulating Wall Street.
  4. Options & Futures

    Dividends, Interest Rates And Their Effect On Stock Options

    Learn how analyzing these variables are crucial to knowing when to exercise early.
  5. Insurance

    Basel II Accord To Guard Against Financial Shocks

    Problems with the original accord became evident during the subprime crisis in 2007.
  6. Investing

    How Do Millennial Women Invest?

    The theme for Women’s History Month is “Make it Happen”, and that is exactly what millennial women are doing when it comes to their investments.
  7. Mutual Funds & ETFs

    Why Mutual Funds Lose Their Five-Star Ratings?

    Ratings help people feel confident about their decision before purchasing. Morningstar’s rating system helps people to find and invest in mutual funds.
  8. Investing

    What Is The Real Picture Of Linn Energy?

    Numbers don't always tell the full story. Take, for example, the long-term chart for LINN Energy which was expected to be down more than 40%.
  9. Trading Strategies

    Swing Trading Indicators: For Those Too Impatient For Buy And Hold

    For investors who are too impatient for the buy and hold strategy, swing trading may be your thing--but seriously, be careful.
  10. Active Trading

    Would You Profit As A Day Trader?

    Market timing is surrounded by controversy, but does it work?

You May Also Like

Hot Definitions
  1. DuPont Analysis

    A method of performance measurement that was started by the DuPont Corporation in the 1920s. With this method, assets are ...
  2. Asset Class

    A group of securities that exhibit similar characteristics, behave similarly in the marketplace, and are subject to the same ...
  3. Fiat Money

    Currency that a government has declared to be legal tender, but is not backed by a physical commodity. The value of fiat ...
  4. Interest Rate Risk

    The risk that an investment's value will change due to a change in the absolute level of interest rates, in the spread between ...
  5. Income Effect

    In the context of economic theory, the income effect is the change in an individual's or economy's income and how that change ...
  6. Price-To-Sales Ratio - PSR

    A valuation ratio that compares a company’s stock price to its revenues. The price-to-sales ratio is an indicator of the ...
Trading Center